Real Estate Agent with Berkshire Hathaway HomeServices, Zack Shore REALTORS


Our friends at Acre Mortgage posted this on the current mortgage/real estate situation today and we wish to share it with all our clients.




It’s my contention housing will lead the way in turning this economy around. After all, housing is the reason we are in this mess. The corruption and deceptive practice of the sub prime mortgage industry has, in my opinion, facilitated an economic tsunami. It has not only tumbled Wall Street, it has adversely affected most all “main streets” globally.

We must reach out to the most important sector of our population; the young and first time buyers. Most all of us prefer to own, the cost of Real Estate in today’s market offers great opportunities for those folks who still believe the “American Dream” is a reality. It’s unfortunate, however, the consistent rhetoric of the naysayers who voiced uninformed opinions regarding home loans are discouraging too many people to take the plunge into home ownership.

The fact is, mortgage money is plentiful. Processing and underwriting rules have reverted to the sensibility standards of the era prior to the sub-prime money giveaway. Today, Lenders need to verify an applicant’s ability to repay the loan in the evaluation process. No longer will money be lent based on unverifiable income and assets; or for applicants with sub par credit scores. The days when Lender based loan approvals on overvalued properties and under qualified borrowers are over; and will never return.

Mortgage Programs now exist for qualified borrowers with minimum investment and affordable payments. Incidentally, low or no down payment loans should no longer be considered a stigma. It has been proven VA loans, with the no down payment provision, represent the most stable and best performing loans in terms of defaults and payment history. It’s not about the product guidelines; it’s about making it affordable. Before Wall Street greed besieged us, the process of Lenders determining a borrowers’ affordability built this country, built communities, built stability and built hope. Essentially, corporate greed and personal bad decisions made by people who lacked the foresight and understanding of what they were buying, robbed or delayed the ability of the next generation to achieve the same dream.

Fixing the housing market, in my opinion, begins the healing; education is the foundation. Too many uninformed potentials sit on the sidelines waiting. I suspect the waiting is due to the unawareness of what is available and what is happening in this market. In terms of a monthly payment, there are legions of potential homeowners who do not know buying a home can be less expensive that renting. They have no clue that if the purchase contract is structured correctly, the cash out of pocket may represent a little more than a month and a half of a security deposit along with a month’s rent.

Most everyone, including the Real Estate Community, have yet to firmly grasp the premise of the FHA “buy it and fix it” 30 year fixed market rate mortgage. A startling means of purchasing a property, “as is”, that is otherwise “un-mortgageable” due to its condition. The ability to purchase a home, usually undervalued due to its condition, and including repairs/customizing with the financed mortgage, represents one way of reaching out to those potential homeowners. This underused and little known mortgage eliminates the concern of dealing with potentially costly repairs after taking ownership. In addition, the plan ensures the home will be compliant to all local codes. There is a one time closing with the pre-determined repairs escrow and paid to the contractor with the homeowner’s supervision and approval. There are numerous other benefits to this program, the FHA 203-K plan.

The “K” program is one of several plans available to entice those sidelined potentials. Also gaining popularity is the USDA no down payment plan, along with the 100% financing parameters of the VA program and the State backed Home Mortgage Financed Agency (HMFA). Additionally, there are local “smart start” incentives and County and State down payment assistance programs.

The moral of the story is hope. Not only for the many of potential homeowners still renting, but for a country in need of picking itself up and economically moving forward. Revenues generated from the revitalization of the neighborhoods and filling up those vacant and neglected homes will begin the road to recovery. The means to accomplish the goal is simple education for the new group of potential homeowners.

Hopefully, this starts it!

Chuck Reed